Midterm election outcomes might drive shares, bonds greater, Morgan Stanley’s Wilson says

With polls suggesting Republicans will win no less than one chamber of Congress, Tuesday’s election gives a possible catalyst for bond yields to fall and fairness costs to climb, supporting the continuation of the bear market rally, Morgan Stanley strategist Michael Wilson mentioned in a word Monday.

The elections will decide the management of each chambers of Congress and the governors of 36 states.

For this week, although, count on volatility within the markets for 2 causes — the outcomes of the election is probably not clear-cut for a few days and the October shopper worth index is prone to produce some noise.

If the Republicans acquire management of each the Home and Senate, the chances of continuous the inventory rally enhance because the GOP has been speaking a couple of spending freeze by way of the debt ceiling, in response to Morgan Stanley Public Coverage strategist Michael Zezas.

“Backside line, we stay tactically bullish on U.S. equities as latest danger occasions for bonds (November Fed assembly, October labor and inflation knowledge) move and go away scope for fee volatility to come back down farther from traditionally excessive ranges,” Wilson wrote.

Earlier, S&P, Dow and Nasdaq futures rise forward of midterms and inflation knowledge set later this week

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